The Business School
Semester Two, 2013
Assignment Topic Due Date: (Week 8) Friday 13th of September 2013 at 23:55pm.
You should submit your assignment and coversheet via UBonline. Your Assignment should be in MSWORD format and the signed coversheet should be in PDF format as a separate file. Each submission will then consist of two files. Please ensure both have your UB student number in your file name.
Dr. Doe (Doe) is a well-respected scientist who has just won the Nobel Prize in medicine for his work in developing a highly effective drug to prevent the common cold. He has recently been engaged in extensive negotiations with Francis Stein (Stein), the president of the Giant Drug Company (Giant), a pharmaceutical company that is interested in marketing the new drug.
On May 1, Doe signed and sent Stein the following letter:
I will accept a position as vice-president in charge of research for a period of four years at a salary of $500,000 per year.
(s) Doe
On May 3, Stein received Doe’s letter and called Doe and stated:
“Your salary request is too high. Will you reduce it to $300,000?”
In the phone conversation, Doe replied:
“Your response is insulting! I am far too good a scientist to work for so little! That’s as low as I can go.”
Outraged by Doe’s flip answer, Stein immediately sent the following letter to Doe:
I resent your statement. I am no longer interested in hiring you.
(s) Stein
Later in the day, Stein changed his mind, and decided to agree to Doe’s demands. Stein then sent a properly addressed, stamped express mail letter to Doe stating:
“Accept your terms, although I wish you would reconsider a lower salary.”
(s) Stein
On May 4, Doe’s secretary received Stein’s express mail letter of acceptance and placed it on his desk. Stein’s first letter had not yet arrived. Before reading his mail on May 4, Doe secured a very lucrative contract as research director with MARK Drugs, a competitor of Giant. Doe immediately called Stein and stated:
“I just agreed to work for MARK Drugs.”
Stein replied: “You can’t, I already accepted your offer.”
Stein consults you, asking if he has a valid contract with Doe and if so, whether Stein can force Doe to work for Giant.
Required: Answer the following two questions. In each case, give reasons for your answers, and support your reasons with case law.
a) Draft a memo fully analysing and discussing why there is or is not a valid contract.
(15 marks)

b) Then assume that there is a valid contract, and fully analyse and discuss the remedies that might be available under that contract. (15 marks)
(Total: 30 marks)